The European Union has taken a strong stance against Google, intending to dismantle its extensive advertising business in their ongoing conflict with the tech giant. Margrethe Vestager, the EU’s competition chief, announced a “statement of objections” on Wednesday, accusing Google of using illegal tactics to dominate the online ad market and overcharge advertisers. The EU plans to mandate that Google sells portions of its advertising business, believing that this is the only way to prompt meaningful change within the company.
Vestager has previously fined Google on multiple occasions, resulting in a total penalty of over €8bn. However, this case marks the first instance where the EU has expressed its intention to break up Google entirely. Vestager explained, “This reflects how deeply Google has entrenched itself in this value chain, to the point where divestment seems to be the only viable solution.”
Google, on the other hand, vehemently opposes the idea of being broken up and strongly disagrees with the EU’s case. The objections brought forth by the EU primarily focus on Google’s display advertising business, a widely-used platform by websites and advertisers to host ads. Google operates AdX, the world’s largest advertising exchange that conducts lightning-fast auctions to determine the display of ads on third-party websites. Additionally, Google provides the most popular automated tools for purchasing and managing ad space.
Vestager accuses Google of favoring its own exchange over competitors by sharing privileged information about superior bids from other exchanges. This gives Google’s AdX an unfair advantage, enabling them to charge inflated fees. She asserts, “[Google] is determining the rules for how supply and demand should intersect.”
Vestager also revealed that she has been in regular contact with the US Department of Justice and the UK’s Competition and Markets Authority while developing the case. Google’s vice president of global ads, Dan Taylor, defended the company’s advertising technology tools, emphasizing their crucial role in assisting websites, apps, and businesses of all sizes in effectively reaching new customers. He stated, “Google is committed to delivering value for our publisher and advertiser partners in this highly competitive sector. The Commission’s investigation solely focuses on a narrow aspect of our advertising business and is not unprecedented. We disagree with the EC’s perspective and will respond accordingly.”
A Google spokesperson added that the company will oppose any demands to divest parts of its business, believing it would harm advertisers. It’s important to note that a statement of objections represents a preliminary set of charges, and it may take years for the European Commission to issue a fine and enforce any orders, which can then be subject to appeal by Google.
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